Rivian's Road Ahead: Is the Adventure Predictable or Risky?

[Electron]

Rivian's Road Ahead: Is the Adventure Predictable or Risky?

[Where do you honestly see Rivian in the near future?]

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First of all, let's just all remember that we're on the same team. We want Rivian to succeed.

This is a hot topic and from combing through the threads, there are obviously two camps.

There are those who can see the writing on the wall if nothing changes and acknowledges that another 100 miles is not possible with a SoC of 1% --vs-- those who can't or either choose not to see the writing on the wall and think another 100 miles is possible when the SoC is showing 1%.

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So we went from this:
(Time stamped to 3:40)


"Wanna be very clear, that the 4th Quarter of this year, uh, we will be, we will be ... positive gross margin."

As one commenter stated, "That was a loud gulp after he said they'd be positive gross margin by end of this year. Bad sign?"

From the delivery, stuttering and body language, RJ didn't seen very confident. Thoughts?

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As many of you are aware, Rivian has revised its projections and is facing several challenges. Initially, the company had set a production target of 57,000 vehicles for the year but recently lowered this to a range between 47,000 and 49,000 due to a shortage of key components, specifically magnet wire for motors.

Rivian shares tanked after they fell short of Q3 deliveries and lowered the production numbers. What gives? Some question and are suspicious of the timing.

There are those who clearly see this as a DEMAND ISSUE, while others believe that this lowering of the numbers is only due to a supply issue. Both can be true at the same time. What do you think?

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As a prerequisite so that we're all on the same page, please watch this video as it does a great job of explaining the financials. It's the best dose of info compiled into one 12 minute video.



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If you have any other videos or sources to share to add to this topic, please do so.

As a reminder, we're all on the same team here, we want Rivian to succeed and we all want our R2s and R3s!

It's important to accept the data for what it is and it's healthy to talk about it. Burying our heads in the sand turns no profit.

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[Electron]

Some screenshots from the video:

RJ did say that Q1 would be rocky, but despite that the take away is that Q3 fell short regardless.

The gap has shortened, but will it converge in time?

 

[Electron]

Q3 was the Voucher quarter. Q4 was coined to be the true test, but things have shifted. Will Q4 produce enough organic sales? Thoughts?

At a cash burn rate of $5B a year, how much time does that buy us? (Rhetorical on purpose as there's an answer to this.)

Nice to see an example of it being possible.

Very important chart for those who are new to the VW deal. I see there being a big misconception that Rivian got a $5B cash dump. That is NOT the case. It is structured into tiers with conditions attached to it.

 

[COdogman]

Most poll options ever?

 

[Electron]

Most poll options ever?

Figured I'd mix it up a little and do something different from the norm. This is a deep topic with many layers and it'll be interesting to see the results as it populates.

 

[COdogman]

Figured I'd mix it up a little and do something different from the norm. This is a deep topic with many layers and it'll be interesting to see the results as it populates.

I didn’t get too speculative. I voted that Rivian will survive, that R2/R3 will be real, and Rivian will open more Spaces.

 

[Electron]

I didn’t get too speculative. I voted that Rivian will survive, that R2/R3 will be real, and Rivian will open more Spaces.

I think they'll survive too. As for the Rivian Spaces though I think that's a huge waste of money where they could be better allocating those funds to Service Centers where we need it the most right now.

Imagine what the annual operating costs are for these spaces? Especially in the bigger cities where it's a fortune for each square foot of real estate. I'm thinking the range between $500,000 to over $1 million depending on the location and size of the space at the minimum.

They could hold mini Rivian events (like actual events with some effort, not just opening the door and saying hi guys) at the Service Centers at virtually no cost for test drives etc. This in my opinion would create some consistency in local grass roots marketing that they can build on.

ie. There are smarter and more effective ways to advertise than to burn cash for these Rivian Spaces. It's just my opinion.

 

[COdogman]

I think they'll survive too. As for the Rivian Spaces though I think that's a huge waste of money where they could be better allocating those funds to Service Centers where we need it the most right now.

Imagine what the annual operating costs are for these spaces? Especially in the bigger cities where it's a fortune for each square foot of real estate. I'm thinking the range between $500,000 to over $1 million depending on the location and size of the space at the minimum.

They could hold mini Rivian events (like actual events with some effort, not just opening the door and saying hi guys) at the Service Centers at virtually no cost for test drives etc. This in my opinion would create some consistency in local grass roots marketing that they can build on.

ie. There are smarter and more effective ways to advertise than to burn cash for these Rivian Spaces. It's just my opinion.

I tend to agree, although I understand why they are adding them. Unlike in the early days when people did quick test drives and tried to get questions answered at the service centers to varying degrees of success, the Spaces are built to answer all those questions.

I wish they didn’t try to get prime real estate that like you said must cost a fortune. And I wish they had expanded service more before doing it - the optics aren’t great. I guess to them it’s a calculated risk.

I don’t think they could even hold an event at the Denver service center anymore. They have every square inch of that property filled with Rivians and inside is all service space and a small waiting area. When I picked up my T last year I couldn’t even find a place to park my trade in LOL

 

[Electron]

I tend to agree, although I understand why they are adding them. Unlike in the early days when people did quick test drives and tried to get questions answered at the service centers to varying degrees of success, the Spaces are built to answer all those questions.

I wish they didn’t try to get prime real estate that like you said must cost a fortune. And I wish they had expanded service more before doing it - the optics aren’t great. I guess to them it’s a calculated risk.

I don’t think they could even hold an event at the Denver service center anymore. They have every square inch of that property filled with Rivians and inside is all service space and a small waiting area. When I picked up my T last year I couldn’t even find a place to park my trade in LOL

I'm convinced that if they were to take the budget for just one of those Rivian Spaces and put it toward weekly events at different venues/locations, there would be a ton of money left over.

There are way better and more efficient ways to market.

Imagine a Rivian event of some kind happening all the time across the country. They could rent out a spot and do some collaborations with local businesses, all the while getting the Rivian community involved to help out. With that kind of budget it would be amazing.

I said weekly above only to illustrate that even at a frequency of doing weekly events, it would cost a fraction of running a Rivian Space. It'd be way more consistent, create way more buzz and accomplish more than one of those Spaces in my opinion.

A lot of the service centers are getting overwhelmed, it's extremely problematic and something Rivian needs to address pronto. I would put having access to a service center in the top 3 of what's most important as part of the ownership experience. That peace of mind that you're taken care of in a lot of these larger cities is just not there and that I'm sure has turned a lot of people off from buying a Rivian.

 

[Donald Stanfield]

I think the deep dive you're trying to do here with only publicly available information isn't going to cut it. If we had access to Rivian's internals such as traffic and conversion rates through their spaces we could better decide whether or not the spaces were worth the money. What I can tell you for a fact is I was at the Nashville space last Saturday and Thursday. During the time I was there it seemed like quite a few Rivians were going on test drives.

I ordered one from the space and as a current owner Rivian was already on my radar but being able to test drive the car made my decision for me as I was between a few possible vehicles.

 

[CompilerBreak]

I went with the closest option, I think R2 will happen, they seem to be on that trajectory. But R3 will be dependent on success there, otherwise we could very well see them getting bought up if the R2 can't hold things on it's own.

 

[Electron]

I think the deep dive you're trying to do here with only publicly available information isn't going to cut it. If we had access to Rivian's internals such as traffic and conversion rates through their spaces we could better decide whether or not the spaces were worth the money. What I can tell you for a fact is I was at the Nashville space last Saturday and Thursday. During the time I was there it seemed like quite a few Rivians were going on test drives.

I ordered one from the space and as a current owner Rivian was already on my radar but being able to test drive the car made my decision for me as I was between a few possible vehicles.

Aren't all the deep dives from both ends being done with publicly available information, including your side of the argument? -- Which would mean that your opinion wouldn't be cutting it either?

In my opinion, we don't need internal numbers to determine if the amount of money spent on the Spaces is worth the money or not.

Even with a budget of $500,000 (just one of those spaces alone where it's more likely into the six figures), I'm convinced that they could do a lot more in a more efficient manner to create brand awareness, thus leading to a higher conversion rate.

So what I can tell you for a fact, having worked in the corporate realm with various marketing campaigns is that those Spaces are not an efficient way of creating brand awareness and winning over customers. IMO it's money poorly spent.

Do you acknowledge the fact that there is a major problem with how poorly planned the service centers are? Would it make more sense to allocate more funds into improving and building out more service centers? Or to spend Millions on the "flashy-feel good for nothing" Spaces, all the while our service centers are struggling?

I think my point is pretty clear. The simple take away is that more money should be allocated to service centers over a cash drain (Spaces.)

 

[salted]

Would like to start by saying I would love to see them succeed. I also think with the stock as low as it is, they are a very attractive acquisition. It’s not just the software, it’s also that they are vertical. No dealerships, a flawed but existing service center network, RAN, engineering talent etc. I’m surprised it hasn’t already happened.

 

[Donald Stanfield]

Aren't all the deep dives from both ends being done with publicly available information, including your side of the argument? -- Which would mean that your opinion wouldn't be cutting it either?

In my opinion, we don't need internal numbers to determine if the amount of money spent on the Spaces is worth the money or not.

Even with a budget of $500,000 (just one of those spaces alone where it's more likely into the six figures), I'm convinced that they could do a lot more in a more efficient manner to create brand awareness, thus leading to a higher conversion rate.

So what I can tell you for a fact, having worked in the corporate realm with various marketing campaigns is that those Spaces are not an efficient way of creating brand awareness and winning over customers. IMO it's money poorly spent.

Do you acknowledge the fact that there is a major problem with how poorly planned the service centers are? Would it make more sense to allocate more funds into improving and building out more service centers? Or to spend Millions on the "flashy-feel good for nothing" Spaces, all the while our service centers are struggling?

I think my point is pretty clear. The simple take away is that more money should be allocated to service centers over a cash drain (Spaces.)

Since we are pulling backgrounds into this, what I can tell you as a C-Suite executive is that I can guarantee there are more factors here than you realize and there is most certainly a team of people dedicated to analyzing Rivian’s spaces as a cost vs benefits solution.

Decisions to spend millions of dollars aren’t made with a coin flip. Looking at Rivian’s overall strategy and how most of their decisions seem to be pretty good business wise, I cannot believe someone would green light this expenditure without looking at revenue generation.

One other thing to back this up, they have people with tablets getting customer information walking around those spaces. What do you suppose they are doing that for? I’m willing to bet it’s to analyze the effectiveness of their expenditure. Without access to their internals I cannot say for sure but the evidence points there.

 

[Donald Stanfield]

Also, there is a difference between spaces and service centers. Service centers are pure overhead, and spaces are profit centers. Basically a space is an expense used to make money whereas service only costs money when all the vehicles being serviced are still under warranty.

If it were my company I’d run as lean as possible without people leaving the brand due to service. Minimum service centers(overhead) and plug the holes where people are upset. From what I understand LA area is highly concentrated for Rivian and they have less capacity than the East coast where I live.

Start with as few as possible then add where needed. Also it’s okay for customers to be a little frustrated over service times, just not so angry that they wind up leaving the brand. Certainly it’s a fine line to walk, and as a consumer of Rivian’s I certainly don’t like this strategy, but it’s good business.

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